In other litigation involving insurance coverage issues, Ashland Inc., a specialty chemicals manufacturer, has settled with insurers and individuals. That case involved a 2006 factory explosion that caused more than $30 million in damage to surrounding residential areas. Pursuant to the settlement agreement, U.S. District Judge Denise J. Casper in Massachusetts dismissed the case. But she said that the case could be reopened if the settlement wasn’t consummated, with a deadline of 45 days being set.
The terms of the settlement are confidential. Several insurers, led by Vigilant Insurance Co., along with dozens of individuals, filed suit against Ashland in December 2011, alleging the company supplied large amounts of explosive and volatile solvents for CAI Inc., the commercial printing ink manufacturer that operated the Danvers, Mass., facility where the November 2006 explosion took place.
It was alleged in the suit that Ashland delivered some 6,000 gallons of flammable solvent the day before the explosion without checking whether the tanks in the facilities were able to store large quantities of such chemicals. The suit alleged further that Ashland should have known CAI did not have the required license or permission to maintain that amount of flammable and explosive chemicals at the facility. CAI made ink products with Ashland-supplied chemicals at the facility. The Plaintiffs distinguished their suit from an earlier class action against Ashland over the same explosion. In that case, Judge Casper had denied class certification just a week before this suit was filed. It was alleged that the named Plaintiffs in the second suit had different goals from most of the members of their proposed class.
Judge Casper ruled that those Plaintiffs – two residents and Sentry Insurance, who sued Ashland in 2009 – would seek higher damages from Ashland than the rest of the Plaintiffs they were proposing to represent. Significantly, the other Plaintiffs had agreed to indemnify CAI, which Ashland had named as a third-party defendant in the initial suit. In the earlier litigation against facility operators CAI and Arnel Co. Inc., the two defendants agreed to pay $7 million – funded by their insurers – into a trust for residents affected by the explosion and to insurers who sought payback of property damage claims. In return, the residents and residential insurers who received payouts agreed to hold CAI and Arnel harmless and indemnify them from further damages related to the explosion.
According to Vigilant’s complaint, Ashland failed to ensure the safety of the storage of chemicals and mixtures in the facility, which had been stored in unventilated tanks that had not been properly sealed, and did not ensure that the facility had adequate safety controls to prevent the accumulation of the solvent vapors that led to the explosion.
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